Bankruptcy or Foreclosure Only

[kjuarbe]

Hi everyone. Just found this forum and have gotten a lot of information so far, but its still so mind blowing.

So...here is my situation.

I have a Condo which i bought and used to live in until i got married and moved in with my husband. Bought the condo in early 2007 and moved in with my husband in late 2007. I have been able to rent the condo off and on, but never at the monthly payments i owe.

I have been a year with out a job due to starting our own business and doing freelance photography. With my husbands income we have been able to pay all our debt, but in december, his company fell victim to the economy and he was pushed back to part-time (better than laid off as other co-workers).

Now with half the income, we cannot afford to pay the condo. So we have been considering going on foreclosure. Its not our homestead so we do not want to keep the place.

I have been current with all debts and this month will be the first i cannot pay the mortgage.

I spoke with a lawyer today who advised bankruptcy, chapter 7. The reason he advised BK was because he said there is a chance of deficiency and taxes and this way i'd be better off. I only owe $2,000 in cc debt. My car is paid off.

My main concern and the reason why i would consider BK is the fear of Deficiency. I bought the condo for $147K and a similar unit just sold for $40K. We cannot afford to pay the condo, we do not want the condo, but also not afford, nor want to, pay a deficiency on the difference.

So i wanted to ask here what you guys think is the better option. I have no other assets other than a used 98 Escort. My name is not on the house we live in now and my husband does not own it, his parents own the house and he pays rent. We have no other assets together.

So i really need a pros and cons list. Like i mentioned earlier, what i am mainly afraid of is paying a deficiency and the taxes that will be owed. Also concerned if any option will affect him.

I am not that concerned with my credit score being that without this mortgage we can afford everything cash, we will just have to live within those means and we wont be needing credit for a long while.

Any help and advice is greatly appreciated.'

Thanks,
Kristina

PS. To the moderators, sorry for the double post, i had originally posted this question on the foreclosure topics but could not find the way to delete or move it.

[queenbee]

We had this happen in 07... our house auctioned for $70,000 or $80,000 bank bought it,relator sold it for $79,000 and we pd $141,000 and all said and done $160+...in our state WI if you have a first mortgage only they do nothing, we did not pay the taxes etc..YOU are responsible for insurance or they will charge you HUGE!!! and all utilities stay w/ you not the property which sucked for us they had the heat on 100 degrees and our bill was 1500 boy was I pissed! no problem with foreclosure though takes about 10 months to a year and we attended no hearings and owed nothing...double check laws in your state or a real estate atty..DO NOT short sale that is stupid idea FYI the bank will try to talk you into it...you sell for less than what you owe so it sells quickly and have to pay the difference ya bad idea! hope that helps any more questions pm me I will try to help...we only lived in our house 1 yr and left it vacant until new owner got it like a yr later

[NeedNewStart]

Hey Kristina,
Similar situation here... My state (Nevada) allows for a deficiency judgment so even though I have NO other debt besides the mortgages, I'm going to file BK.

[queenbee]

I agree with the others, filing BK is the best answer. Renting is a hard business and can cause lots of problems if you get the wrong renters. Good Luck.

I use to be a landlord also that can make you file bk if they trash or don't pay etc.....my point was if you don't have alot of debt ...depending on your state you don't HAVE to file bk if it is a first mortgage only property because the bank is not going to come after you for the deficiency...just double check...if you have 2 mortgages that is a different story, the 1st won't come after you but the 2nd will/can... that's in WI...we are not even including the house from 07 in my husbands ch7 atty said no worries for our state

[kjuarbe]

Hi, thanks for the replies everyone. This is such a stressful time for me. Tomorrow is the 1st and the first month i wont be paying any bills.

I think i pass the means test based on the fact that i've been un-employed for the last year due to a business we started and me attempting to do photography. So my average income for the last 6 months has been $0, way below the median lol.

Wanted to get advice on timing. The lawyer we spoke to yesterday said i should not pay any bills (mortgage and cc bills) and wait till August or September to see him again and file for bk. So pretty much wait 5 or 6 months after not paying bills and then file. Is this best? and why?

I'm also curious to know what could cause a dismissal? I only have the mortgage with has gone down substantially in value (the main reason for the bk option) and about $2,000 in cc bills. Im scared of getting a dismissal and still having to pay the deficiency and the cc debt.

I'm so nervous about April being the first month, but i guess its time to get ready and face the music. I just pray it all works out. All i ask for is to be able to walk away from the condo without paying the deficiency and taxes, thats all i want lol That condo has been such a huge mistake, im ready to put it behind me and start over.